Establishing organisational resilience through developing a strategic framework for digital transformation

1.1 Digital disruptions

Vial (2019) states that DT has been experienced as an industry disruptor driven by three elements: (1) technology, (2) competition and (3) consumer behaviour, as shown in Figure 1.

Globally, it is evident that companies which prioritise continuous digital improvement of business strategies and operating models thrive as they take advantage of emerging digital capabilities that enable a competitive advantage such as Amazon, Google, Facebook, Netflix and Apple (Miguel & Casado, 2016). Their capability to adapt and accept technological advancement locates them in a unique position where they can better understand the customer and cater to their needs, thereby increasing their market share in different industries. These companies use platforms that enable them to provide targeted advertising, co-create products with customers and incorporate customer feedback appropriately. Therefore, technology can be utilised to develop new businesses and increase the stability of product delivery and services (Schiavi & Behr, 2018). Andal-Ancion, Cartwright, and Yip (2003) discuss the fact that, although it can be challenging for traditional companies to adopt DT strategies, it is vitally important to enable these organisations to retain their customers and remain profitable, as shown in Table 1. The implementation of DT has shown benefits for organisations in line with operational efficiencies, streamlined operations, reduced costs and increased quality; thus, this study aims to develop a strategic framework to roll-out DT successfully.

1.2 Disruptions due to the pandemic

The significance of adapting and pivoting in the digital economy for most organisations was magnified during the crisis brought about by the coronavirus disease 2019 (COVID-19) pandemic. The pandemic caused an economic shock in most industries as social distancing became the new norm, forcing companies to review their business and operating models. For most businesses this meant investing more into digital platforms for customer and employee reach, automating production systems and diversifying their markets to match the evolving demand for products and services. Fletcher & Griffiths (2020) states that during the pandemic, several organisations realised that (1) they had no digital platforms for video conferencing, (2) they were dependent on on-site platforms which were not remotely accessible, and (3) they comprise a fixed workforce and organisational structures and processes. These organisations’ digital maturity was very low, and thus it was challenging to adapt to the new business environment. Advancing technology such as machine learning, blockchain, geospatial location intelligence, predictive analysis, robotics and drone technology have been enablers of organisational resilience. The impact resulting from the pandemic affected workforces, technology, operations and business models as shown in Figure 2.

Technological investments impacted by the pandemic: Technology investments conducted by organisations had to be re-prioritised to those that were key to business survival during and post-pandemic. The rise of the use of cloud deployment to avoid physically located servers, the adoption of safe communication platforms to enable stakeholder engagements and the use of analytics to reach consumers better was observed across various industries including retail, financial services and manufacturing. Organisations whose digital maturity was very low pre-pandemic due to few or no technological investments had to improve their digital maturity in order to maintain business continuity in the face of a disruptive environment (Fletcher & Griffiths, 2020). Therefore, the pandemic has been a main driver for organisations to increase their digital capabilities and applications.

Rapid automation of operations due to the pandemic: Organisational operations were also highly impacted as production centres were closed. This forced manufacturing, mining and energy companies to automate their systems rapidly to continue production during and post-pandemic. Belhadi et al. (2020) analyses the time to recover within the operations field post a disruption through organisational resilience. A good resilience strategy will ensure that the recovery time is minimal and the impact on performance is quickly overcome. Since most organisations resilience models were not robust, the pandemic led to a lot of production coming to a standstill, which had a huge negative impact on business continuity. The pandemic forced a lot of businesses to rethink and revamp their operations by utilising modern technology to improve production during and post-pandemic. As a result, organisations have been able to extract more information from their operations, identifying opportunities to increase production and improve quality and safety through Internet of Things (IoT) solutions.

Redesigning of business models post-pandemic: For most organisations, the impact of the pandemic meant that they had to re-evaluate their business models to ensure organisational resilience and manage business risks resulting from the rapidly altered business environment. Fletcher & Griffiths (2020) states that post-pandemic, the most agile organisations would have adapted from lessons learnt from this experience. These businesses will continue to evolve in innovative ways after the pandemic. Organisations that did not build resilience during this pandemic will be disrupted during the next period of disruptive risk, which could range from poor weather, disruptive consumer behaviour or a drastic rise in competition. Thus, they should ensure that they are evolving to a higher digital maturity level.

The impact of the pandemic on the workforce: The workforce was highly impacted by the pandemic as employees could not work in centralised office spaces due to the health risks, thereby forcing organisations to allow employees to work remotely from their homes. This was challenging for organisations in South Africa that had to establish new policies and procedures to promote productive work-from-home environments. These new ways of working also caused challenges for management in leading and monitoring their virtual teams. Although the trend of virtual teams was already emerging due to globalisation and new technology, the pandemic accelerated this process.

1.3 Research details

This study aims to develop a strategic framework which management can use to implement DT within established organisations, as an approach to building organisational resilience in a disruptive environment. The digital economy has changed consumer expectations and engagement behaviours, as consumers now expect a tailored and enjoyable user experience. The qualitative study focuses on the 3P’s approach to analyse the DT: (1) plant, (2) processes and (3) people. This research contribution is to develop a framework that can be utilised by established organisations to ensure the efficient and effective adoption of DT. The research question is: how can organisations enable organisational resilience through the use of DT as a tool?

2.1 Organisational resilience through DT

Organisational resilience through DT has become extremely significant to the survival of business post-pandemic, as the pandemic has impacted business models, value networks and the technology required to thrive in the digital economy. Globally, it is evident that companies which prioritise continuous digital improvement of business strategies and operating models thrive, as they take advantage of emerging digital capabilities that give a competitive advantage such as Amazon, Google, Facebook, Netflix and Apple (Miguel & Casado, 2016). Their capability to adapt and accept technological advancement places them in a unique position where they can understand the customer better and cater for the customer’s needs, thereby increasing their market share in different industries. These companies use digital platforms that enable them to provide targeted advertising, co-create products with customers and incorporate timely customer feedback. Therefore, technology can be utilised to develop new streams of revenue and increase stability of product delivery and services (Schiavi & Behr, 2018). Andal-Ancion et al. (2003) discuss the fact that, although it can be challenging for traditional companies to adapt DT strategies, it is a vital task to enable these organisations to retain their customers.

The ability of an organisation to evolve rapidly and adapt to changing business environments is termed “organisational resilience”. It describes the phenomenon by which a business remains competitive when exposed to disruptive risk. Mcmanus, Seville, Brunsdon, and Vargo (2007) describe resilience as a function of an organisation’s: (1) situational awareness for an understanding of the entire operating environment, (2) control of the main vulnerabilities in the areas of concern during a significant disruption and (3) adaptive capacity based on the culture and dynamics of an organisation that enables decision making in a Volatile, Uncertain, Complex and Ambiguous (VUCA) environment. The attributional resilience model developed by a community of interest group, focuses on the attributes that are possessed by highly resilient organisations. These are crucial as they consider agility as a key attribute, which agrees with our study as it models organisational agility as a key DT success factor. The resilience triangle model analyses the process capability, resources and infrastructure and management, people and knowledge capabilities. The herringbone resilience model considers the organisation’s capabilities, activities and characteristics collectively, as drivers of business continuity in a disruptive environment. All these models possess important aspects that will be considered as part of this research into strengthening an organisation’s resilience, with a focus on the organisation’s capabilities, and its approach to dealing with technostress to ensure employee well-being and improved performance. The combined use of these resilience models is a good foundation for understanding and extending how to build organisational resilience in the digital economy in the face of uncertainty. The rapid growth of the use of digital technologies has been a tool utilised by organisations to be resilient against business risks posed by rapidly evolving customer demands, competition and the company’s dynamics such as culture, ways of working and processes.

Gibson and Tarrant (2010) discuss the principles of modelling resilience, as a good risk management approach, since it is multidimensional and exists over a range of conditions. Figure 3 shows three models for organisational resilience: (1) the attributional resilience model, (2) the herringbone resilience model and (3) the resilience triangle model. Tengblad & Oudhuis (2018) argue that organisational resilience extends beyond being a capability to a philosophy of ensuring companies can navigate adverse, complex and uncertain situations in a responsible and pro-active way. It defines a resilient organisation as one that uses its financial, technical and social resources to develop long-term capabilities, in an efficient and reliable manner, to manage risks and exploit opportunities. Resilient companies are strategically placing themselves to exploit openings when other companies lose direction and stop being competitive due their inability to generate sufficient survival resources. Technology has disrupted a number of products such as telegraph, cassettes and film cameras. Less adaptable organisations have closed down due to unfavourable market and business conditions. Therefore, it is important for organisations to ensure that their resources are well taken care of, and that they continuously develop innovative ways to meet their customer demands.

2.2 The 3 Ps framework

To develop a comprehensively, mutually exclusive and collectively exhaustive approach to utilising DT as a tool for organisational resilience in the face of disruptive risk to ensure business continuity, various factors must be established within the 3Ps framework (people, process and plant). The 3Ps framework is critical in the analysis of DT adoption as the three elements should be considered as the basis of developing a comprehensive DT strategy. Therefore, this study will investigate how each of these areas can be tailored to promote organisational resilience through DT.

Plant: To ensure organisational resilience, companies need to leverage the available innovative technology to improve business performance and competitiveness. Technological infrastructure or tools are one of the main drivers of digital innovation. New technology involving Social, Mobile, Analytics, Cloud and Internet of Things (SMACIT) has led to innovative product development, improved customer experience, streamlined operations and improved business models. Hinings, Gegenhuber, and Greenwood (2018) state that “Digital innovation is about the creation of novel products and services; by digital transformation we mean the combined effects of several digital innovations bringing about novel actors, structures, practices, values, and beliefs that change, threaten, replace or complement existing rules of the game within organisations and fields”. The Technology Enactment Framework (TEF) is used to analyse the structures and institutional arrangements on the roll-out of technological strategies. Technology is considered both objectively (technological hardware and software) and enactment (structural setups), as demonstrated by the sociotechno system described by Esteves and Joseph (2008). The diamond framework by Leavitt describes organisations as consisting of four elements: (1) actors: the people within the organisation, (2) structure, (3) tasks: processes and (4) technology. The diamond framework argues that these four elements need to be in balance for transformation to occur, although it does not provide further detail on the role depth of the elements to create value in the organisation as it does not indicate readiness toward transformation. This framework demonstrates that organisations consist of both social and technical elements, and that both are equally significant and need to work together for value creating transformation to occur. Thus, in this work it is important to consider both the social and technical elements to enable resilience through DT.

Processes: Organisational processes have been highly impacted by the quickly evolving digital technologies, as they are expected to allow for quick alterations to cater for rapidly changing customer requirements. Therefore, agility has been a key enabler in digitally developing organisations (Guinan, Parise, & Langowitz, 2019). The evolving technology has fostered processes motivated by agile methodologies as opposed to waterfall approaches. The agile manifesto focuses on: “(1) individuals and interactions over processes and tools (2) working software over detailed documentation (3) collaborations over contract negotiation (4) change of management over following a plan”. Beltran and Ramesh (2018), Schwarz, Kalika, Keffi, and Schwarz (2010), and Warner and Wäger (2019) state that the dynamic capabilities to implement DT are based on the ability of the organisation to adapt to the evolving technology. The applicability of agile systems across different industries outside of the IT space has been a growing concern, but the tools have shown great benefits in catering for the rapidly evolving digital environments. Therefore, it is critical to review organisational processes and ensure that they promote agility as part of utilising DT as a tool to organisational resilience. To promote agile processes, organisations are adapting a design thinking framework which promotes system design based on user inputs, as part of the customer centric design methodology to product development.

People: In developing a successful DT approach, it is important to consider people-related issues such as culture, stakeholder engagement, learning and development. These areas are crucial to ensuring that the organisation’s workforce is equipped to accept and drive the digital direction. McClelland’s “theory of needs” details that the needs of an individual are acquired and shaped over time through life experiences. This theory is based on three needs for motivation: (1) achievement (2) power and (3) affiliation. McClelland states that these needs are not based on an individual’s environment, culture or social status but rather motivated by recognition in their workplace (Royle & Hall, 2012). The need for achievement is driven by an urge to succeed among competitors, whereas the need for power is driven by having influence to control or lead others. Individuals whose need for motivation is through affiliation, have a desire for interpersonal and social relationships, which is fuelled by working in groups and sticking to the norm to avoid rejection. Contrary to McClelland’s, Sirota’s motivation theory is based on three motivating factors: fairness, achievement and togetherness (Sirota & Klein, 2013). The management should incorporate these needs for motivation in the organisation’s digital strategy to promote the adoption of DT.

2.3 New business models, value creation and limitations

The implementation of DT techniques leads to revamped business models that are designed to result in new value creation for the organisation and its stakeholders. Developing an organisation’s business model requires an appreciation of the key elements contributing to disruptive business models. Fost (2021) discuss four areas which influence disruptive business: key trends, market influence, industry influence and macroeconomic trends. These support the areas to be evaluated in the PESTEL model when conducting an external organisational analysis during the development of DT strategy. Therefore, it is vital for organisations to understand their operating environments and the factors that could impact their digital strategy and business models. Figure 4 explains the digital business models.

Transforming the business is implemented through revamping the business model to ensure that it focuses on improved customer experience, redesigning the brand and uncovering new opportunities (Cuofano, 2020). Based on the literature review on organisational resilience and DT, the research gap is a strategic framework that integrates the different elements of DT to enable a successful roll-out in the South African environment.

2.4 Adoption of digital technologies in South Africa

It is quite evident in the South African context where these disruptions have had a significant impact, that organisations that are not participating in the digital economy will not benefit from the unique value add, such as improved customer experience, efficient operating and business models. These organisations will be disrupted as consumers are opting for more convenient products and service offerings. Technological advances have resulted in the disruption of traditional ways of business globally. They demand that businesses reinvent themselves with the aim of deriving more customer value. A study conducted by the consulting firm, Deloitte Africa, maps out the Digital Disruption Index by engaging senior leaders across the African continent, with a focus on South African organisations. It indicates that 38% of organisations are in the early stage of development, 52% are digitally developing and 10% are digitally maturing, as shown in Table 2, (Deloitte Digital, 2020). Therefore, the digital maturity is low thus a huge research gap to ensuring organisations improve their digital maturity and enable organisational resilience.

A study of the South African financial services adoption of DT, analyses its adoption as a developing country (Modiba, Kekwaletswe, & Komati, 2020). South Africa’s challenges to establishing DT have been caused by a steady economic growth, technology, infrastructure, cultural diversity and political issues. Therefore, industries in this country require tailor-made solutions to suit their economic and political climate. South Africa’s position on digital adoption has led to further challenges in responding to the pandemic and implementing the required changes for business continuity. Modiba, Kekwaletswe, and Komati (2020) investigate how the financial services sector operates in order to be competitive in the digital economy by leveraging new technologies. The study pays particular attention to South Africa, which is categorised as a developing country, considering the fact that a large population of the country are in under-developed areas, where there is limited access to technology. Modiba et al. (2020) utilise the Technology Organisational Environmental framework to analyse the case of South African financial services. The results show that under the organisational context: (1) there is a culture of micro-managing working hours, as opposed to being output based; (2) scattered in-house capability building, not leveraging companies that specialise in particular skillsets offered by big companies such as Amazon and Microsoft. The technology context focused on (1) increased fault tolerance to ensure that system failures result in minimum impact to customers and (2) complex legacy systems resulting in high costs in managing demands. The environment speaks to customers who do not have the infrastructure to access innovative products due to being in under-developed areas (Modiba et al., 2020).

The (Price Waterhouse Coopers, 2018) report discusses how South Africa is falling behind without DT. Despite DT being on the radar for a lot of C-suites, few organisations’ digital investments result in a competitive advantage in the market. A global study showed that only 10% of manufacturing companies are digital champions, who view DT as an approach to push innovation, beyond automation and networking. In this report, it states that none of the manufacturing companies surveyed in South Africa are digital champions as most fall into the digital novice category. The research shows that digital champions are deriving more than 50% of their revenue from digital investments. Two-thirds of companies do not have a clear digital vision and strategy to support DT and the required culture (Price Waterhouse Coopers, 2018). Chief Information Officer (CIO) Africa analysed the state of DT in South Africa and the challenges presented by legacy systems (CIO Africa, 2019). Legacy systems present challenges to (1) innovation (2) creativity and (3) new cloud deployments to spark progress. Technological advances are seen to change by industry, and mostly by individual organisations such as banks, which are changing faster due to an increased threat from digital banks. Insurance organisations are investing resources to catch up with the digital economy. The introduction of Amazon and Microsoft data-centres in South Africa will result in increased migration to cloud deployment, which will, in turn, increase the uptake of Machine Learning and Artificial Intelligence (AI), to derive value from data and enable improved decision making. One of the top concerns in the technology sector, is cyber security which is crucial to protect the organisation and its customers data. Big organisations are collaborating with innovative start-ups, to build digital capability (CIO Africa, 2019). The increase in digital adoption will strengthen organisational resilience as they will be better equipped to deal with VUCA environments.

3.1 Research design

A qualitative approach is utilised to understand the DT elements that impacted digital maturity within the workplace in the South African context during the pandemic. The research approach will be to utilise interviews in order to have a deeper understanding of how organisations have been impacted, and how they have reacted in the face of the pandemic. The interview investigates the digital investments that organisations had prior to the pandemic and how they enabled business continuity, what further investments were injected as a result of the pandemic, and how businesses have been permanently impacted leading to a shift in digital maturity. To conduct the qualitative research, grounded theory is used to build the theoretical framework based on the collected data. The research problem is that there is lack of management frameworks to enable the adoption of DT in a developing economy. This research’s main contribution is to develop an empirical framework for the smooth adoption of DT in South Africa.

3.2 Interview sample environment

Professionals were interviewed to obtain a detailed analysis on how the use of technology implemented during the pandemic has impacted organisations, and the workforce, with a particular focus on the digital environment and maturity in these periods. The data analytics utilises MAXQDA software for the coding process. Ten interviewees in digital management were chosen to represent different industries namely: mining, financial services, energy, retail and oil and gas, as shown in Table 3. The interviews were carried out through face-to-face discussion, and video calls through platforms such as Microsoft Teams and Zoom. The themes identified will then be used to arrive at an approach for utilising DT as a tool to build resilience in the face of disruptive risk. There is an equal distribution in the sample across the different industries interviewed. The majority of the interviewees were male between the ages of [18,35], each with an educational level of a bachelor’s degree, at least, as shown in Figure 5. This is due to the technological space being young, and male dominated in South Africa. The interview questions are indicated in Table A1.

4.1 People element

The analysis shows that the people element is impacted the most by DT when analysing the discussions across the different industries. Interviewee 5M states that “People will not appreciate the value of understanding data and the insights brought about by digital”. Unless explained to them, this lack of understanding can hinder projects’ successful DT roll-outs. 5M also elaborates that “People only prioritise data that speaks to their bottom line, i.e. the bank will be most likely to have the correct customers’ bank balance”. Furthermore, that people who are industry domain experts would benefit from understanding digital knowledge: “because of the direction that the world is taking, it will be advantageous for the operations those people have to perform for them to have an understanding of digital, data science, and what it can offer them, what value can they extract from it”. 6M states that during the pandemic, “The technology part, for ways of working, was impacted, because people did not have data for connectivity which now had to be issued”. Since they had no infrastructure or connectivity to work-from-home, these factors contributed to technostress, as employees were not comfortable working through technological digital platforms because they were used to being office-based. Due to the pandemic, the people element became more crucial due to remote working. This was accelerated by the COVID-19 pandemic, during which people had to maintain social distance and set up their work offices in their homes. This caused a lot of dynamics across the different sectors for the employees and led to a lot of technostress areas, such as techno-invasion as the line between personal and professional space overlapped. This transformation also impacted communication between internal stakeholders (employees and management) and external stakeholders (customers and executive board). This is supported by the interviewee in the financial services sector who stated that: “Definitely. Working remotely has made people to think that they can always have access to a person through channels like the email system.” “Because working remotely has led to one not separating the work and personal.” “And I don’t think we have quite figured it out, adapting to remote working”.

4.2 Technology element

The implementation of value adding technology was one of the major elements identified as being crucial to the roll-out of a DT initiative. The qualitative analysis shows that it is crucial that the organisation conducts an analysis into which technologies would drive the most value, both in the short and long term. Across the different sectors, various technologies have been implemented such as machine learning, cloud computing, data analytics, blockchain and FinTech technologies. Although the implementation of these technologies is at infancy stages, some benefits have been realised in terms of understanding the plants’ operational efficiencies and the consumer behaviour. In the financial services sector, cloud adoption has had a major impact, in terms of improving agility and cost reduction, as pointed out by 2M: “So pre-pandemic, we actually used Amazon Web Services (AWS), for most of our services but now we’re using Google Cloud for all services”. “But we had to accelerate our cloud migration. That went very well, I think, we’ve managed to move almost 50% of our workloads from on prem to the cloud”. “And in terms of agility, and speed, for innovation speed, with the move to cloud, somehow we have managed to shorten our go to market cycles”. “While moving our workloads to cloud, another important thing that we have been doing, and we are continuing to do is observability, which is basically being able to have a view of all the events or interactions that happened within our business services”. “And our move to cloud has also helped a great deal with cost reduction”. “So, because we no longer own very expensive infrastructure for the most part, and we’re leveraging, cloud capabilities”.

4.3 Process element

In terms of processes, it is important that the organisation updates their processes to be in line with more streamlined and agile approaches to management for the changing corporate environment and consumer expectations.

4.4 Strategy and organisation element

The re-evaluation of business models to derive new ways to getting revenue is important to ensure that organisations are competitive and sustainable in future digital economy.

4.5 Overall strategic roll-out

When it comes to the implementation of tech, organisations need to be strategic about this roll-out, and start by deriving value from fundamental tools that will allow for decision making, like dashboarding, as stated that: “Transparency is your first step, before doing more sophisticated tech, through visualisation. It could even start deriving value if its driving decision making within the organisation”. When asked about the successful implementation of DT, the respondent from oil and gas, 6M, stated that: “Success will be when we have become clearer about which areas need which kind of technologies, and deploying those technologies where we need them to achieve those gains, either from an operational perspective, or from a customer interaction perspective”.